The characteristics of global listed infrastructure – defensive fundamentals, exposure to a number of structural growth drivers, and its ability to generate inflation-protected income – are undoubtedly attractive to a broad range of investors.
“Global listed infrastructure assets tend to complement other constituents of an investment portfolio,” says Peter Meany, head of global listed infrastructure at First State Investments.
“Investments in listed infrastructure assets demonstrate lower volatility than a typical portfolio of stocks and shares, while also offering the combination of capital growth and inflation-protected income which cannot typically be obtained from fixed interest.”
Darius McDermott, managing director of Chelsea Financial Services, sees these funds as a means for investors to lower the overall risk levels on their portfolios due to infrastructure’s low correlation to other asset classes.
“Infrastructure funds are another way to diversify your overall portfolio and income stream. I wouldn’t envisage them playing a huge part, but certainly a weighting of around 5 per cent may be considered by some investors.”
Another use, suggests Neil Shillito, director at SG Wealth Management, is to use infrastructure funds as a means to gain access to a particular sector or theme.
Mr Meany acknowledges that infrastructure is not for everyone.
“Although relatively defensive, and more liquid than direct infrastructure investments, listed infrastructure equities can fluctuate during times of market volatility.
“For this reason, the asset class may not be appropriate for an investor who is investing over a short timescale, or who is averse to the possibility of their investments exhibiting volatility at any point.”
